April 13, 2011

Obama Makes His Stand

President Obama's speech today was about policy and politics. But it was also about principles, as Obama made clear early in his remarks:

From our first days as a nation, we have put our faith in free markets and free enterprise as the engine of America’s wealth and prosperity. More than citizens of any other country, we are rugged individualists, a self-reliant people with a healthy skepticism of too much government.

But there has always been another thread running throughout our history – a belief that we are all connected; and that there are some things we can only do together, as a nation. ... Part of this American belief that we are all connected also expresses itself in a conviction that each one of us deserves some basic measure of security. We recognize that no matter how responsibly we live our lives, hard times or bad luck, a crippling illness or a layoff, may strike any one of us. “There but for the grace of God go I,” we say to ourselves, and so we contribute to programs like Medicare and Social Security, which guarantee us health care and a measure of basic income after a lifetime of hard work; unemployment insurance, which protects us against unexpected job loss; and Medicaid, which provides care for millions of seniors in nursing homes, poor children, and those with disabilities. We are a better country because of these commitments. I’ll go further – we would not be a great country without those commitments.

If there is an essence of the liberal vision for America, that passage captures it. It's the idea that a modern, enlightened society promises economic security to all, notwithstanding illness, accident of birth, or age. The liberal vision is not an imperative to establish equality, as its detractors sometimes claim. But it is expectation that government will guarantee sustenance, peace of mind, and simple dignity--that the pursuit of these goals will bolster, rather than impede, freedom.

In the era of Roosevelt and Truman, Kennedy and Johnson, Democrats talked openly and proudly of this mission. But in the last few years, at least, Democrats have seemed less comfortable with such rhetoric, or at least less comfortable with their loftier ideals than Republicans have been with theirs. This contrast has been vivid in fights over the economy, climate change, and health care, with Democrats making sensible, nuanced arguments about growth rates and Republicans making hyperbolic, simplistic claims about "socialism."

Not on Wednesday. The president can seem like a compulsive mediator, desperately seeking opportunities to forge common understanding among adversaries. It's an admirable quality and, frequently, an aggravating one. But in the budget speech Obama drew a clear contrast between his vision of America and that of the Republicans. Even as Obama called for bipartisan cooperation and cited, as a model for budget balancing, the work of his bipartisan deficit commission, he described the proposal from House Budget Chairman Paul Ryan in stark, but accurate, terms:

The fact is, their vision is less about reducing the deficit than it is about changing the basic social compact in America. As Ronald Reagan’s own budget director said, there’s nothing “serious” or “courageous” about this plan. There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires. There’s nothing courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill. And this is not a vision of the America I know.

The alternative, Obama explained, looks like the budget outline the White House released with his speech. It would leave Medicare, Medicaid, and Social Security in place, tinkering with their finances but stopping well short of wholesale changes, let alone the demolition Republicans have in mind. It seeks to reduce health care spending, but with the same essential approach of the Affordable Care Act--that is, promoting efficiency even as it lowers spending. (I'll have more specific things to say about that later.) It would add revenue, as well, in part by letting President Bush's tax cuts for the wealthy expire. The expected result of these and initiatives, including some kind of "failsafe" provision for automatic spending cuts, would be steady deficit reduction in a manner that seems both more humane and more realistic than the Republican vision.

Obama's proposal carries political risk, and not simply because plenty of voters don't think of America as one country, indivisible. Any effort to raise revenue, no matter how narrowly focused, inevitably stirs anti-tax sentiment. Sure enough, the Republican National Committee website is already calling Obama the "Confiscator in Chief." But new taxes are also essential to good government, because you can't have a welfare state (even a small one) if you don't have money to pay for it. And Obama said as much, saying "I refuse" to renew tax breaks for the wealthy yet again:

They want to give people like me a two hundred thousand dollar tax cut, that's paid for by asking thirty three seniors each to pay six thousand dollars more in health costs. That's not right. And it's not going to happen as long as I'm president. ...

Some will argue we shouldn’t even consider raising taxes, even if only on the wealthiest Americans. It’s just an article of faith for them. I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more. I don’t need another tax cut. Warren Buffett doesn’t need another tax cut. Not if we have to pay for it by making seniors pay more for Medicare. Or by cutting kids from Head Start. Or by taking away college scholarships that I wouldn’t be here without. That some of you wouldn’t be here without. And I believe that most wealthy Americans would agree with me. They want to give back to the country that’s done so much for them. Washington just hasn’t asked them to.

To be sure, Obama could ask for even more. From a policy perspective, the one, big disappointment of Obama's proposal is what it doesn't do: He still does not endorse higher taxes on the middle class, whether by allowing all of the Bush tax cuts to expire (as opposed to those only on high incomes) or imposing new taxes on carbon that would take on global warming even as they raised revenue. Partly as a consequence, Obama's budget calls for approximately two dollars in spending cuts for each new dollar in revenue--an imbalance that mirrors provisions of the president's bipartisan commission led by Erskin Bowles and Alan Simpson.

That would likely mean some combination of insufficient deficit reduction and harsher cuts to government programs, as many of us feared. And while it's possible the political environment might not support still higher taxes--that, in effect, the administration has accurately judged the political market's willingness to bear new new revenue--the larger danger of this proposal is that it becomes the opening bid in a negotiation that ends with some far less appealing compromise.

As Bob Greenstein, director of the Center on Budget and Policy Priorities, warns:

To be sure, the President’s plan represents an important step forward in the debate. But it should be recognized that this plan is a rather conservative one, significantly to the right of the [Bipartisan Policy Center] Rivlin-Domenici plan. While we worry about some particular elements of the President’s plan, we worry much more that the deficit-reduction process that’s now starting could produce an outcome that is well to the right of the already centrist-to-moderately-conservative Obama proposal, by reducing its modest revenue increases and cutting more deeply into effective programs that are vital to millions of Americans.

Then again, not all negotiations play out so linearly. Senior White House officials argue that embracing a credible bipartisan plan strengthens their political leverage with Republicans more than touting a less popular, but more liberal, proposal would. And plenty of smart political observers think Obama's main job today was less specific anyway--that it was simply to draw a single, clear line separating Ryan and everybody else.

This much seems certain: For all of the attention the speech has generated within the political class, relatively few Americans will ever hear or read the actual text. Its significance lies primarily in how it frames the debate, and negotiations, going forward. Obama has laid out a credible plan for reducing deficits and, more important, he has described a vision of America he wants to defend. For today, at least, that seems like enough.